Hi Friends!
I’ve been doing my research about budgeting and I found out from Comet Financial Intelligence that only 20% of 1002 people who participated in their survey do not follow a budget!
I am surprised! Only 20%!
They did not mention the complexity of the budget people is following but that is a different topic to discuss. My hope is you are not one of the 20% and if you are, today is the day that story will change!
I have been preaching a lot about budgeting and how I encourage you to take action and create your own budget. I have given you reasons why a budget is important, showed you steps on how to make a budget and taught you a little cheat on how to automate your personal finances.
Today, I’m going to give you reasons why people fail with their budget and explain to you how you can win.
Reasons Why People Fail With Their Budget
People have the wrong definition of a budget
A budget is a forecast of future income and future expenses over a set period of time. Many people fail and quit to budget because they believe a budget is a law that is set in stone which should not be broken. This is very far from true!
Just think about our government budget. They never follow it yet they keep on doing one.
Why?
Hint: It is not because they love to waste time and taxpayers money!
The reason is it gives them an idea what they can and they cannot do during their political term.
This is also true for regular people like us. Our budget should act like a compass that will guide us toward financial freedom. Our budget will help us spend on things that are important to us and help us avoid buying things or services that are not important to us.
For example, a lot of millennials dream of buying a house, but if we look at our expenses, about 40%-60% of our money is spent on eating out or buying virtual items. Of course, there is nothing wrong spending your hard earn cash on foods or video game add-ons if they are your priority. However, it doesn’t make sense if your goal is to buy a house but you spend your money on what you believe are useless in your life.
People do not know how to budget
One acceptable reason why people don’t budget is they do not know how to.
Statistics show that about “67% of people have not attended a financial seminar or program”. In addition to, personal finance is not part of a school curriculum nor being taught by parents at home. For these reasons, we cannot fault these people for not being able to do a budget.
If you never had a chance to learn how to budget, then please consider reading my post about How To Budget And Save Money.
People are convinced that doing a budget is long and tedious
Instant gratification is one of the problems our generation have. We want to achieve great things without working for it. We want happiness and we want to it now. We want an instant reward for all the work we do.
This is the mentality we apply when we make our budget. Most of us get discouraged to do a budget because there are lots of things to do every month and we need to record our expenses every time. However, if we do not sacrifice a few hours a month budgeting or few minutes recording our expenses now, then we will have to spend years trying to clean up our financial mess. A worst-case scenario for some is they never recovered from debt until the day they die.
If you really have no time making a budget, then at least automate your personal finances.
People believe a budget is irrelevant to their current financial situations
There are two types of this kind of people. The first type are those who think budgeting is not for them because they are already in a financial deep hole while the opposite of this kind is the one who believes they don’t need to budget because they are rich… at the moment
People who are in deep financial trouble believe it is too late to budget
A sad reality why people don’t budget is they simply gave up. They are in deep financial trouble and they believe making a budget is too late now.
If this is you, then I want to encourage you that it is always never too late!
Budgeting is a behavior not a test of financial strength nor knowledge. It is never too late to start budgeting.
Budgeting is very similar to dieting. Not because people are obese means they shouldn’t diet. Sure the process will take longer but a person can always replace a bad eating habit with a good one.
If you are one of the people who believe there is no more hope for your personal finance, then let me tell you that you shouldn’t give up. Develop the habit and continue doing it even it feels like it is not making a dent on your personal finance. You will never know when your circumstances will change and when it does, I want you to be ready!
People who are wealthy believe a budget is only for people who need to maximize their income
The other type is those who don’t budget because they believe they will never run out of money. This is far from the truth!
Look at how many celebrities, entrepreneurs and athletes who were once very wealthy are now struggling to meet ends needs. They may once make millions of dollars per year but if they do not know how to budget then I bet a million dollars that they will be broke sooner or later.
The bottom line is really simple. Know your total income then make sure your expenses are equal or better yet below that. If you are blessed to have an income that is significantly greater than your expenses, then I encourage you to allocate a portion of your income to your retirement’s fund.
People believe sticking to a budget is a skill, not a habit that can be developed
Budgeting is a habit that needs to be developed over time. You can read my articles, read different books about budgeting, or listen to different personal finance gurus but without applying what you have learned, then you will end up not improving.
Now since budgeting is a habit, I want you to make realistic steps in developing a good budgeting habit.
Do not overestimate yourself. If you are budgeting for the first time, don’t expect that you will do it perfectly on the first try. Start with just knowing how much you make every month and list all of your expenses. Then you can start balancing your budget by calculating every month your total expenses then minus that from your total income. After that, start cutting cost, cutting back, or cutting out your expenses to make sure to decrease your expenditures.
What do you think?
What is your favorite reason why people fail with their budget? Do you have another reason why people fail? Can you relate to one or more of the reasons? Let me hear what you think down below.
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